29 / 90
26
ON THE WHOLE, EMERGING MARKET RETAILERS HAVE
OUTPERFORMED DEVELOPED MARKETS
For retailers in emerging markets such as China and
India, sales of gold and gold jewellery, normally a
low margin category, represent the majority of their
revenues. However, retailers in these markets selling
diamond jewellery have benefited from structural
factors: growing economies, an increasing base of
consumers with appetite for diamonds and expanding
number of stores selling diamond jewellery. In
China, there is also a benefit from relative sector
consolidation, with multiple jewellery retailers
operating ‘at scale’.
Over the past few years, however, EBIT margins
(which for the major listed developing market
jewellers are similar to those of leading developed
market peers) have come under pressure
8
as jewellery
input costs have increased and the pace of expansion
has slowed (see Fig. 11). In addition, gold demand
volatility has also played a role in weakening financial
results. As economic growth decelerates in the next
few years, and competition increases, it is likely that
margin pressures will also build for diamond jewellery
retailers in emerging markets.
THE IMPORTANCE OF ONLINE CHANNELS RISES ACROSS
THE WORLD
Both emerging and developed markets saw a rise in
the importance of online channels in 2013. More
than one in six diamond jewellery purchases in
the US were made online in 2013, a growth of over
30 per cent since 2011 (see Fig. 12). Going online
also remains the most popular way for consumers
to research a purchase in the US: almost four in 10
consumers go online for research purposes before
buying, ahead of other touch-points such as jewellery
stores and advertisements (see Fig. 13).
Although online is not yet a significant sales channel
in China, the internet is already used by a quarter
of acquirers for different purposes, such as to learn
about fine jewellery quality and prices, to learn about
brands, and to pre-select designs. The internet is used
more frequently in the diamond purchase process by
single women, half of whom use it, and also by affluent
consumers, about six in 10 of whom research online.
Online, including mobile usage, can be expected to
grow in importance for diamond jewellery retailers
everywhere, be it for research purposes before a
purchase or as a sales channel (pure or hybrid, via
web sales with store pick-up).
FIG. 12:
GROWTH OF ONLINE DIAMOND JEWELLERY
SALES IN THE UNITED STATES
Source: De Beers
2013
13
18
2011
12
13
2006
5
8
Per cent of value
Per cent of pieces
Share of online acquisitions in total women’s
diamond jewellery market
FIG. 11:
FINANCIAL RATIOS FOR A SELECTION OF
LISTED JEWELLERS IN EMERGINGMARKETS
Source: Bloomberg
Chow Sang
Sang
7
4
7
7
Luk Fook
Holdings
22
12
11
19
Lao Feng
Xiang
15
4
5
14
Hengdeli
Holdings
8
8
11
10
Thangamayil
Jewellery
1
1
5
12
Tribhovandas
Bhimji Zaveri
8
7
9
12
ROIC
2012 Most recent
EBIT
2012 Most recent
Chow Tai
Fook
14
12
15
13
CHINA
Titan
Company
22
10
10
35
INDIA
Per cent